BP Delaying Decision on Prudhoe Bay Oil Shutdown

Oil major BP Plc (BP) said on Thursday it will delay to next week its decision on whether to completely shut down the western portion of its 400,000 barrels per day Prudhoe Bay oil field.

BP had said earlier this week that it would decide by Friday whether it would completely shut Prudhoe Bay. Output from Prudhoe Bay was further reduced on Thursday to 120,000 bpd after holding steady at 200,000 bpd from Tuesday evening through Wednesday, BP said.

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"BP has focused its ramped-up inspection activities on the still-producing Western Operating Area (WOA). A decision whether to shut in the WOA is expected by the beginning of next week," BP said.

BP began shutting down the Prudhoe Bay oil field on Sunday after a government-ordered pipeline inspection turned up severe corrosion and a small leak on an oil transit pipeline on the eastern side of the field. Subsequent inspections have revealed an additional five holes on the pipeline, BP said.

The problems with the eastern oil transit line come only a few months after another corroded transit line on the western side of the field ruptured and spilled at least 200,000 gallons of crude oil, prompting a federal regulatory crackdown and a criminal investigation.

BP has announced plans to replace all 16 miles of oil transit lines at Prudhoe Bay and the company has ordered 10 miles of replacement piping so far. A source familiar with the repair plans said on Thursday the cost of replacing the pipelines would be around $100 million.

BP has also bought 3.5 million barrels of crude oil to supply its West Coast refineries, enough to supply its two refineries in Washington state and California for a little over seven days.

Despite the continued reduction in production at Prudhoe Bay, BP said it is resuming oil well drilling and completion operations at its oil fields throughout the North Slope.

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